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Laissez-Faire Capitalism as a Far Superior Solution to Reparations

By Walter Donway

July 10, 2020

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Part I of this essay was titled, “Reparations Are Racist and Regressive—Let Economic Freedom Liberate Us All,” and can be found here.

 

Here is the argument and conclusion of Hannah-Jones’s polemic, in a nutshell: “Citizens don’t inherit just the glory of their nation, but its wrongs, too. A truly great country does not ignore or excuse its sins. It confronts them and then works to make them right. If we are to be redeemed, if we are to live up to the magnificent ideals upon which we were founded, we must do what is just.

“It is time for this country to pay its debt. It is time for reparations.”

Well, thanks, anyway, for the stuff about “magnificent ideals.” I always thought so, too. But I did not think one of them was collective guilt and collective punishment. Hannah-Jones is not talking about reparations for slavery—not really. She would not get far with that. Only by portraying American history as uninterrupted oppression of Blacks, economic slavery (a.k.a., capitalism), can she portray today’s Black Americans as in the same moral category as slaves in terms of deserving reparations.

The Ku Klux Klan persecuted and terrorized immigrants, Jews, and others, in addition to Black people.

Her article is so long because she recites a century and a half of injustices—and outrages—suffered by Black Americans. Most, she suggests, were perpetrated by the law or connived at by law officers. In fact, however, injustices from the Salem witch trials to city riots to lynching on the western frontier to plain-old police brutality were part of the history of all Americans. And so was prejudice, known to almost every immigrant group. The Ku Klux Klan persecuted and terrorized immigrants, Jews, and others, in addition to Black people. The draft enacted to fight the Civil War to free the slaves was widely resisted and the toll of suffering and death for those who fought the war was vast.

 

The Indictment Is of Government Economic Intervention

Virtually all instances of economic hardship and unfair treatment suffered by Black Americans were the result of government programs.

Virtually all instances of economic hardship and unfair treatment suffered by Black Americans were the result of government programs: the Homestead Act, the Fair Housing Act of 1968, subsidies of state university systems mostly for white students, heavily subsidized industries like railroads that birthed white fortunes, legal privileging of mostly white unions, “middleclass welfare” programs that favored the fully employed—a roster of government economic interventions. But such intervention always and inevitably favors some individuals over others. And the differences are not primarily racial. The beneficiaries are the legions of political-business “cronies,” the recipients of tax-supported benefits to the “needy,” support for “high culture,” support for “urgent” concerns of those already wealthy (environmentalism, zoning, national parks, fellowship programs, the latest hospital technology, breaks for retirement savings).

Hannah-Jones’s instincts are socialist. But if the United States had remained more nearly laissez faire capitalist, there would have been no government mechanism by which some groups (including racial) could extort gains at the expense of others. No way for the white, the middleclass, the “connected,” to use taxes, borrowing, subsides, regulations, and giveaway programs to consolidate their economic power.

And, yes, political power does tend to flow toward those already economically well-off; she has that right. But under laissez faire capitalism, political power cannot be used to consolidate and increase economic power. Laissez faire—economic freedom—means separation of economy and state exactly as freedom of religion requires separation of church and state.

 

Capitalism

“Capitalism” is not “brutal.” Life before capitalism often was brutal, wretchedly poor, and endlessly exhausting.

“Capitalism” is not “brutal.” Life before capitalism often was brutal, wretchedly poor, and endlessly exhausting. Every variety of economic domination existed: feudalism, serfdom, colonialism, and slavery. Capitalism did not make life for the poor easy or pleasant overnight. Eight-hours days, the end of child labor, workplace safety, and much of what we take for granted today was made possible not by legislation but by the increasing wealth generated by economic freedom under capitalism.

It was capitalism that displaced feudalism, mercantilism, serfdom, colonialism, and, above all, slavery.

It was capitalism that displaced feudalism, mercantilism, serfdom, colonialism, and, above all, slavery. When the capitalist North in America went to war with the feudal-agrarian South, it was the end of slavery in the civilized world. Capitalism certainly did not take hold immediately in the post-bellum South, although plantations soon became far more profitable with paid labor and machinery. And, unfortunately, by the time of the great migration of Black Americans to the North, after WWII, capitalism had begun to be dismantled by populism and progressivism; it was being gutted by the New Deal, and was later converted to a semi-capitalist interventionist-welfare state by the Great Society.

Blacks came north too late to benefit from the capitalism that created the most rapid economic growth and broadest participation in wealth in history.

Has the relative economic position of Black Americans not improved in more than 70 years? And that despite the welfare programs, housing programs, educational programs, civil rights legislation, affirmative action, racial quotas for admission to college, and other efforts demanded by Black leaders and provided by white politicians?

Not surprising. What creates wealth is a combination of economic freedom (severe limits on government power to intervene in the economy and hand out benefits) and a capitalist-bourgeois ethic of individual self-responsibility, hard-work, planning and saving, law abiding, and, above all, valuing independence. That armamentarium of virtues has not vanished from American life, of course, although each generation fears it is severely attenuated in the next generation.

Many Blacks internalized that outlook and are successful, often gloriously so. But for the last half century Black acculturation to that outlook has faced fierce headwinds:

  1. From the welfare lifestyle,
  2. From failure to form families,
  3. From widespread excuse-making for the crime wave of Blacks against Blacks,
  4. From excuse-making for systemic Black underperformance in high-school,
  5. From university affirmative action and lowering of standards to try to help Blacks succeed,
  6. From a near-national-religion of belief in Blacks-as-victims,
  7. From the encouragement of Blacks to blame and attack police for their plight,
  8. And now, from encouraging Blacks to hope that they will become wealthy overnight when street protests become widespread and frightening enough—and the neo-Marxist coalition of academics, journalists, and politicians becomes single-minded enough—to stampede the country into reparations.

If reparations are implemented they will create a new industry: excuse-making for failure to change the culture of Black America and making only a temporary change in the average economic status of Black families. The handiest excuse, planted in the article, will be that too little was done to eliminate discrimination. Hannah-Jones argues that this is not the root cause of the “wealth gap” because she wants to focus on reparations. But, if reparations eliminate the “wealth gap” only briefly, that will be offered as proof that discrimination, after all, was the problem.

If Hannah-Jones were not in the grip of a postmodernist/Marxist historical framework—dismissing any explanatory power of ideas, including philosophy—she might see the paradox in the claim that only an economic foundation can fully potentiate civil rights, enfranchisement, and political power. The decisive change in the philosophy of Black advancement and leadership came around 1900. At the birth of a civil rights movement, a new leader, W.E.B. Dubois, wrested leadership from the older, towering post-Civil War Black leader, Booker T. Washington. Washington, a former slave and founder of the Tuskegee Institute, steadily and eloquently advocated that those freed from slavery must strive first, and above all, for economic independence, partly by mastering agriculture and low skill jobs. That was the bedrock. That would win the respect, trust, and resources to bid for the full reality of U.S. citizenship.

Washington was hugely influential with whites and Blacks. He understood that the political battle for citizenship would succeed upon the foundation of the economic power Blacks would achieve.

The much younger leader, W.E.B. DuBois, always a leftist who latter became a member of the Communist Party and ardent defender of Joseph Stalin, became Washington’s ideological adversary. And won. He attacked Washington for consigning Blacks to “lowly” occupations and denying that they must demand immediately full civil rights and political power. He became a leader and influential editor at the National Association for the Advancement of Colored People (NAACP). His views prevailed as the civil rights movement became identified with protest and Black programs with political power. Such as the intellectual heritage of Martin Luther King, Jr., almost a Marxist whose chief white advisor, Stanley Levison, had been at the top of the Moscow-directed American Communist Party, which Levison left to join King’s movement. (This probably was why the Kennedy administration tapped King’s telephone conversations.)

The paradox, here, is that now we are told, at excruciating length in Hannah-Jones’s article that justice, rights, equality did us (Black Americans) no good—because we did not have solid economic foundations. Booker T. Washington had said: “No race that has anything to contribute to the markets of the world is long in any degree ostracized. It is important and right that all privileges of the law be ours, but it is vastly more important that we be prepared for the exercise of these privileges.”

By wealth. But Washington could not in the throes of his wildest dreams imagine this meant not earning economic independence but being handed a fortune taken from other Americans. It took the communist worldview of DuBois, and a century-long collapse of the American perspective of individualism, to bring a reparations bill in Congress.

 

Not “Reparations,” Economic Freedom

The interventionist-welfare state (emphatically not capitalism), always favors the majority, the politically connected, the informed. And makes permanent the underdog.

Those who truly would lead Black Americans should demand America’s return to economic freedom. That would level the playing field for Blacks. Because the interventionist-welfare state (emphatically not capitalism), always favors the majority, the politically connected, the informed. And makes permanent the underdog.

Entry into a multitude of occupations of unskilled labor requires a license, medallion, certificate, compliance with zoning, apprenticeship, special occupational safety training, and, of course, bribes to government inspectors. All these barriers to entry hinder most those on the lowest rung of the economic ladder. The Institute for Justice long has litigated such issues precisely on behalf of those who need economic freedom most.

Most damaging are the minimum wage laws, shown to cause unemployment of entry-level workers, and, overwhelmingly, Black teenagers. Not profitable to hire at the minimum wage, they never get hired and do not acquire the experience, skills, and behavior norms to ascend the economic ladder. By the way, however, many economic disparities between whites and Blacks apply to Black men, not Black women. And that, surely, is a matter of Black male culture—such as a rate of violent (and all) crime by Black men that is many multiples of those of other races.

I suspect that repealing minimum-wage laws and a few other barriers to entry could make a measurable improvement in average Black economic standing. With the remediation of disaster-level unemployment of Black male teenagers, so much could change …

Hugely helpful would be drastic cuts in taxes, especially sales, gasoline, real estate, and ancillary payroll taxes. Whatever benefits Blacks are handed by government—including legions who pay no income taxes—cannot offset this constant bleeding of those Blacks who do work, earn, budget, and try to save.

If Black leaders fiercely advocated for Black advancement, they might even be the sole group successful in challenging the all-time sacred cow of government programs: public education. What Blacks, like all of us, must have, is quality education in the earliest years. And when you need high quality, you do not put government bureaucrats in charge. The industry upon which Black Americans depend desperately is socialized.

Black families are forced to take what bureaucrats offer. They must attend schools in their own neighborhoods (except for a few programs of “choice” and “vouchers’) or have enough money to pay taxes for public schools plus tuition at private or parochial schools. In early education, where choosing quality is paramount, most Black families are “stuck.”

This is an argument that Hannah-Jones uses in a different context. If Black families had wealth granted by reparations they could afford quality education. They might buy a house in a prosperous neighborhood where higher real estate taxes and a mostly white population (as where Hannah-Jones went to school) ensure quality education. They might pay local school taxes and still send their children to private (“independent”) schools.

But if there were no taxes for public schools, then Black families could spend that money on independent schools; all families would be using and supporting such schools; and the efficiency and results-orientation of American enterprise, not the sludge of education bureaucracy, would set standards of quality. (By the way, the tiny minority of “profit making” schools, today, in an ocean of subsidized and hostile public schools, are no test of applying the dynamic, innovative, and efficient engine of capitalism to education.)

 

In the End, It’s About Freedom

The proposal for reparations is advanced as a radical remedy for an intractable social disorder. In fact, it is today’s most regressive “big idea.” It is a parody of the admonition not to “throw money” at problems. Reparations are postmodernist philosophy writ large, with morality, especially “social justice,” a matter of collectives. It does not matter what individuals did, or even what generations did. It only matters if one is part of an “oppressor” class or the “oppressed.”

Reparations could be the most regressive social scheme since slavery.

All successful political striving in human history has been for freedom—thought, speech, publication, economic activity, political participation, worship, national identification, justice before the law. That is all that government can give to us without taking much more.

Successful struggles for freedom permanently improved the lives of those who fought and generations that followed. ­­­They are the only political/social battles worth winning. Black Americans, and all Americans, today, need the radical individual economic freedom conceived in the U.S. Constitution—and eroded, now, for more than a century, by European postmodernism and its economic ideal, neo-Marxism.

No, do not gloss over the intolerable contradiction in the U.S. Constitution—chattel slavery—and the grotesque compromise it represented for a new nation. The price for that compromise could be fearful, as Thomas Jefferson, a lifelong owner of hundreds of slaves, predicted. And it was, paid in the American Civil War and, in the 20th Century, by momentous efforts—now dismissed as mostly futile—to “achieve equality.”

Government cannot deliver economic equality. All evidence, most tellingly American history, is that government can deliver no genuine economic or other benefit except freedom. And no nation or people needs more for their progress, prosperity, and happiness.

In this hour, Americans are thinking about the infinitely tragic history of injustice suffered by Black Americans. That is a rare and perhaps fleeting opportunity for all who care about Black Americans to demand the goal of restoring laissez faire capitalism—ever the invincible ally of those hard-pressed economically.
 

 

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